Whereas the government has met most of its fiscal targets, it has made slower progress with structural reforms, especially the privatisation of the four state-owned banks. The ECF initially targeted a final call for bids by December 2009, which was later extended to September 2010. However, these deadlines were missed because of the lack of a suitable legal framework. The National Assembly remedied this in October 2010 by enacting a new privatisation law that provided for a privatisation commission, which is currently being formed. The deadline for final bids has been extended until April 2011, although this may still be too ambitious.

Togo's state banks were recapitalised in 2008 (at a cost of 6.2% of GDP) and the banking system is now much stronger. Deposits rose by 10% and credit allocation to the private sector increased by 20% in the first seven months of 2010, but problems remain. Non-performing loans (NPLs) have fallen, but remain high at 14.6% of gross loans. However, credit to parastatals is rising faster than credit to the private sector-an ominous sign. Moreover, six banks do not meet the newly raised minimum capital requirement of CFAfr5bn (US$10m) and "one large bank" (according to the IMF) fails to meet the prescribed capital-to-assets ratio of 8%. In addition, financial intermediation remains inefficient, as marked by wide interest rate spreads, which is costly for borrowers. Privatisation is seen as essential to improving the operational efficiency of state banks.

However, Togo met its 2010 ECF benchmark of establishing a new recovery mechanism for NPLs, and progress has been made in reforms affecting the business environment. The government remains on track to establish a one-stop shop for importers at the Port of Lomé-to speed trade and cut costs-and was due to finalise the plans for this by the end of March. The cabinet has also approved a new investment code, which offers tax incentives for labour-intensive projects and the processing of raw materials, and reduces land taxes by 30%, although the final details are still awaited. In addition, the government is close to establishing a new commercial arbitration system to resolve business disputes outside of the main judicial framework, which should considerably reduce delays. An overhaul of free-zone legislation has also been mooted.